Musings, dreams, thoughtcrimes.

Keynesianism = trickle down effect?

I was at a birthday party today when some of my friends started talking about the economic crisis and the stimulus. This is, more or less, how the conversation went.

Person A : Well, once the stimulus is passed there should be more grants because the NSF is getting so much money.

Person B : Yes, and it seems they have to spend it immediately, so basically any proposal that was a borderline reject will pass this time.

Person C : But there is a lot of extra nonsense in this bill. They are spending a billion dollars to prevent STD’s. How will that help the economy?

Person B : But that is the basic idea — the whole point is to create jobs.

Person C : So how does this help create jobs? How many people are employed to fight these STD’s?

Person B : More than you have any idea.

There’s a bit of back and forth about the STD prevention industry and its capacity.

Person C : But some say the bill should be more streamlined. Build more infrastructure. Spending on STD prevention is not the answer. They are just printing money.

Person B: No, you have to understand. The point is to put money into everything. That’s the basis of the trickle-down effect. The more areas you spend it in, the more the economy gets stimulated. It trickles down. Now if you believe this theory, it makes sense to spend. That’s what they are doing.

Person A : Actually I heard Jon Stewart talking about the ‘trickle up’ effect too. Give the money to us and let’s all save and it will trickle up.

Everyone laughs.

—

I was quiet during the entire discussion of course. But it felt a bit like being in a parallel universe.